Yu Ning
Caixin Online
April 28, 2014
Communist Party chief of Xining removal follows sweeping graft inquiry on a former head at a regional resources giant. A senior official in the northwestern province of Qinghai Province has been removed from his post, with sources close to the situation linking the case to a major mining company.
On April 28, the official Xinhua News Agency reported that Mao Xiaobing, the Communist Party chief of Xining, the capital of Qinghai Province, was fired from his post, only four days after the Party’s anti-graft watchdog announced an investigation into Mao.
The Central Discipline Inspection Commission (CDIC) said in a short statement on late April 24 that Mao was being investigated for “serious disciplinary violations.” Although no further information was provided, such allegations are typically used to refer to corrupt activities.
49-year-old Mao is the eighth provincial-level official reported to come under investigation since the beginning of this year.
Several sources close to the situation told Caixin Mao’s probe is related to Jiang Biao, who was placed under a corruption inquiry in early March. Jiang was former vice chairman of Xining-based West Mining Group.
Mao was the former chairman of West Mining and its listing subsidiary between 2000 and 2009, when he was appointed vice party chief of Xining. The investigations over Jiang and Mao have fanned speculation on violations related to West Mining, a company which secured several eye-catching funding deals in recent years.
West Mining was restructured from the Xitieshan Mining Bureau in 2000, which was China’s second largest producer of zinc and lead. It was created in 1983 as a subsidiary of the state-owned China National Nonferrous Metals Industry Corp. (CNNMIC). Mao became the head of CNNMIC in 1999.
After the establishment of West Mining in 2000, Mao was appointed chairman and general manager. He had actively pushed the company forward in the introduction of financial investors.
In December 2005, West Mining sold a 16 percent stake to China New Era Co., a 30 percent stake to CITIC Trust and a 20 percent stake to Zhongguancun Science City Construction Holding Co. The Qinghai provincial state-owned asset administrator holds 34 percent in the company as the largest shareholder.
At the time, media reports questioned Jiang Biao’s existing ties to outside investors as he headed both New Era and Zhongguangcun Construction before he became the vice chairman of West Mining. The deal was attacked over conflict of interest claims but no official investigation was announced.
Beijing Anruisheng Technology Co. became the second largest shareholder of West Mining Holding, a subsidiary of West Mining in June 2006. The company was later found to have close personnel ties with New Era, CITIC Trust and Zhongguancun Construction.
In June 2007, West Mining Holding launched an initial public listing in Shanghai, raising 6 billion yuan, a 144 percent premium. The company later saw its price surge to 68 yuan from the 32 yuan IPO share price.
In early 2009, Auruisheng sold its stake in the company, and was reported to cash in 2 billion yuan from the transaction. Stake sales of various shareholders along with a mining slowdown in the same year pushed share prices of West Mining Holding into a decline. The company’s net profit in the first quarter of 2009 dropped 83 percent from the same period the previous year. In the second quarter that year, profits slid by 94 percent on a year-on-year basis.
The company’s worsening performance led to management reshuffles. In March 2009, Jiang resigned as the board director of West Mining Holding. And in April, Mao left West Mining to take a position in the Xining government.
A source who spoke on the condition of anonymity told Caixin that Mao’s case was uncovered during the investigation into Jiang, who is suspected of misconduct in mining investments in the southwestern province of Yunnan.
On March 9, former Yunnan vice governor Shen Peiping, who oversaw the natural resources investments in the province, was reportedly placed under investigation
